Article

Red Tape

Gaylen Webb

August 1, 2012

Pentad Properties President Greg Shields and his client were working on a major retail development when they hit a snag in the permitting process at city hall. As it turns out, no one in the building permit department knew who had signed off the plans for his client and who had not.

“I finally had to go down to city hall and get the plans, and then walk them around to the various departments myself to get them signed off,” he says.

Developers like Shields say Utah’s commercial real estate sector may be on the rebound, but muddied permitting processes at city halls around the state are not helping the recovery any. In some situations, the challenges may actually drive away developments (at least to more friendly borders).

Patrick Lucero, director of integrated building services for the real estate firm NAI, says that while many cities want business developments and companies to relocate within their borders, the permitting and inspection process can be so difficult that the developers and businesses choose to locate elsewhere.

Naughty or Nice
Shields doesn’t want to name the offending city for fear of a backlash on other projects. But some cities have reputations in the industry for being difficult, and Lucero says developers deliberately try not to do work in those cities. Shields agrees, saying the big office, retail and industrial users often ask which cities are easiest to work with when considering locations.

Lucero is unabashed about calling out Draper and South Jordan as two of the most notorious cities for their building permit processes. “Draper and South Jordan are two of the worst cities to deal with. On the other hand, Sandy is pretty good and Provo provides unbelievable support. Murray is another city that seems to have its act together. Murray City turns around a review plan in eight days. That makes us wonder why it is so difficult in other cities. What is the difference?” he asks.

Obviously, not every city struggles with difficult or muddled permitting processes and inspections. Shields says he just did a deal in Ogden “that was very complicated and the city was fabulous!”

The developers we talked to say permitting delays are often due to process inefficiencies, lack of clarity in requirements or lack of communication. In other cases, municipal building and zoning departments are simply understaffed and overworked. Meanwhile, other cities tend to think that they are “kind of an island,” Shields adds.

Draper Assistant City Manager David Dobbins says his city doesn’t mean to be on the “dreaded list.” In fact, if developers have concerns, he would like them to come in and talk. “If the development community thinks we are difficult, we want to find a way to remedy that,” he says.

Dobbins freely admits that Draper’s planning and zoning department has staffing challenges, which can lead to slowdowns, especially if the engineers are working on a big road project when a plethora of new building plans come in for review. Currently, Draper’s community development director is on active duty in the military and one of the city’s three planners just quit to go to another city.

“If we hit a spike in building permit applications, we don’t have the resources to deal with the increased volume all at once, so sometimes it takes a little longer to get through the process,” he says.

Inconsistent Approaches
Whatever the reason, delays at city hall cause a lot of heartburn for commercial real estate developers and tenants alike.

Shields says in one of his projects, a conditional use permit application that would normally take about 120 days to get through a city’s review process is reaching the eight-month mark and there is a risk the deal could fall apart.

“It has nothing to do with compliance issues the city wants. The city is just slow getting through the process. This is a $2.5 million deal with a business that probably has $4 to $5 million in sales annually. It could be a boon to the city in terms of sales tax and employment, and it is a use that the city wanted from the get go,” he explains. “The retailer is willing to comply with the city’s conditions, but the time it has taken to get through the process could kill the deal.”

Some permitting problems extend into planning commission issues. Shields says one of his clients attended a planning commission meeting in a particular Wasatch Front city, seeking a conditional use permit for a project. One planning commissioner motioned to deny the conditional use and another seconded the motion. At that point, the city attorney intervened and explained that the planning commission could put conditions on the permit, but could not deny it.

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